The South African government has been granted a $1-billion (about R16.3-billion) loan from the New Development Bank (NDB) to support a far-reaching reform programme aimed at improving the performance of municipal trading services in the country’s metropolitan municipalities.
The loan agreement, signed by the government and the NDB, will finance infrastructure upgrades and institutional reforms under the Metro Trading Services Reform (MTSR) programme.
Addressing infrastructure, service delivery challenges
The programme targets some of the greatest challenges facing the country’s cities, including declining service delivery, ageing infrastructure and the financial sustainability of municipal services responsible for water, sanitation, electricity, energy and solid waste management.
National Treasury said the NDB funding forms part of a broader package of support from international development finance institutions.
Other financiers involved in the programme include the World Bank, the Asian Infrastructure Investment Bank (AIIB), KfW Development Bank and the French Development Agency.
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Funding linked to reform performance
Unlike conventional infrastructure loans, the NDB facility is structured as a performance-based loan, meaning disbursements are linked to the achievement of measurable reform targets and institutional improvements within participating metropolitan municipalities.
These targets must be approved by metro councils and independently verified before funding milestones are released.
Treasury said the reform initiative is designed to strengthen governance, improve financial sustainability and enhance operational efficiency in municipal trading services, which are often at the centre of service delivery challenges experienced by residents.
Favourable financing terms
The concessional loan carries favourable financing terms, including a 16-year maturity period, a three-year grace period, and an interest rate of the Daily Secured Overnight Financing Rate plus 1.18508%.
National Treasury described the agreement as a significant step towards building stronger, more sustainable cities and improving the quality and reliability of essential municipal services.
“The financing supports a government-led, performance-based reform programme implemented through South Africa’s existing legal, fiscal and institutional framework,” Treasury said in a statement.
Support for municipal sustainability
For metropolitan municipalities struggling with ageing networks, infrastructure backlogs and financial pressures, the funding is expected to provide much-needed support while encouraging greater accountability and operational discipline.
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The MTSR programme is ultimately aimed at ensuring that residents receive more reliable water, sanitation, electricity and waste management services while creating financially sustainable municipal entities capable of meeting growing urban demands.
International backing grows
The latest $1-billion loan from the New Development Bank (NDB) is only one component of a larger international financing package supporting the government’s MTSR.
The programme has also attracted €300 million (R4.9-billion) in concessional financing from KfW Development Bank and the Agence Française de Développement (AFD), demonstrating growing international support for reforms aimed at improving the delivery of water, electricity, sanitation and waste management services in South Africa’s metropolitan municipalities.
Germany and France deepen support
According to the joint statement issued by National Treasury, KfW Development Bank and AFD, French support for the programme builds on a long-standing relationship with South African cities, including direct lending to Johannesburg, eThekwini and Cape Town. Those loans were intended to finance municipal infrastructure while supporting efforts to reduce inequality and strengthen resilience to climate change.
Finance Minister Enoch Godongwana said the combined €300-million funding package from Germany and France would strengthen the government’s efforts to improve governance, financial sustainability and operational performance of municipal trading services.
“We welcome the continued partnership of Germany and France in supporting more reliable services, increased infrastructure investment and stronger, more sustainable cities,” said Godongwana.
- The South African government secured a $1-billion loan from the New Development Bank to support the Metro Trading Services Reform programme aimed at improving municipal trading services in metropolitan municipalities.
- The loan will finance infrastructure upgrades and institutional reforms targeting challenges such as declining service delivery, ageing infrastructure, and financial sustainability in municipal services like water, sanitation, electricity, and waste management.
- The loan is performance-based, with disbursements linked to measurable reform targets approved by metro councils and independently verified before milestones are funded.
- The concessional loan terms include a 16-year maturity period, a three-year grace period, and an interest rate of the Daily Secured Overnight Financing Rate plus 1.18508%.
- The MTSR programme is part of a broader international financing package including €300 million from KfW Development Bank and the French Development Agency to support governance, financial sustainability, and operational improvements in South African metropolitan municipalities.
National Treasury said the NDB funding forms part of a broader package of support from international development finance institutions.
READ: BRICS cooperation helps reshape Global
Unlike conventional infrastructure loans, the NDB facility is structured as a performance-based loan, meaning disbursements are linked to the achievement of measurable reform targets and institutional improvements within participating metropolitan municipalities.
Treasury said the reform initiative is designed to strengthen governance, improve financial sustainability and enhance operational efficiency in municipal trading services, which are often at the centre of service delivery challenges experienced by residents.
National Treasury described the agreement as a significant step towards building stronger, more sustainable cities and improving the quality and reliability of essential municipal services.
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For metropolitan municipalities struggling with ageing networks, infrastructure backlogs and financial pressures, the funding is expected to provide much-needed support while encouraging greater accountability and operational discipline.
READ: Scopa keeps eye on municipalities as as minister injects R205 billion for infrastructure
Finance Minister Enoch
"We welcome the continued partnership of
